NIESR slashes UK growth forecast amid Covid-19 second wave

NIESR slashes UK growth forecast amid Covid-19 second wave

One of the UK's leading thinktanks has slashed its forecasts for growth this year after the delay to recovery caused by the second wave of the Covid-19 pandemic.

In its quarterly update, the National Institute of Economic and Social Research said it now expected the economy to grow by 3.4% in 2021 compared with the 5.9% it had been expecting in November.

NIESR said it expected unemployment to rise sharply after the government's furlough scheme ended in April and would reach 2.5m - or 7.5% of the workforce - by the end of the year.

"To prevent a rise in unemployment of the magnitude of the forecast, and to limit the economic and social 'scarring' from the public health crisis, the chancellor should soon announce policies to support the labour market beyond April,“ it said.

The thinktank was less optimistic than the Bank of England about the time it would take for the economy to recover fully from the pandemic, predicting that it would take until late 2023 before output was back to the level reached in the fourth quarter of 2019.

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Last week, Threadneedle Street said it envisaged a return to pre-Covid 19 levels by the start